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Olive: Corporate billions could boost productivity

Just so you know, in order to avoid embarrassment in a Trivial Pursuit game, our federal industry minister is Christian Paradis. His international trade cabinet colleague is named Edward Fast. That said, your suspicion that we have no industrial policy worthy of the name is true.

Into that void, Bank of Canada Governor Mark Carney has repeatedly stepped. Most recently, Carney, stating the obvious, said Wednesday that Canada has no hope of achieving global competitiveness if Corporate Canada insists on continuing to sit on more than half a trillion dollars of idle cash rather than investing it in our country’s future.

I’m not one to argue we have the world’s thinnest-skinned corporate CEOs, though I’ve not heard of a country that outranks us on that metric. It was quite something how rapidly CEOs and conservative economists laced into Carney.

Why, you’d think the $526 billion gathering dust in Corporate Canada’s treasury was par for the course, when in fact it’s a quarter of Corporate America’s $2 trillion or so of similarly “dead money,” as Carney calls it. That’s money that needs to be invested in R&D, plant expansion, cracking international markets, and hiring and training workers for 21st century industries if Canada is to achieve the global competitiveness that ensures our future prosperity.

But, using the standard 1-to-10 ratio for comparisons between ourselves and the Yanks, either Corporate America should have $5 trillion in idled funds, or we should have just $200 billion in “dead money.”

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You’d think, to hear Carney’s detractors, that the OECD’s latest annual report on Canada in May had not, in fact, focused on our abysmal productivity record. Canada’s productivity growth has been stagnant for decades, of course. But since 2002 it has actually declined.

You’d think we were R&D leaders, when in fact our meagre R&D spending of 1 per cent per year is half that of the U.S. The likes of Japan, South Korea and most Scandinavian countries spend 2.5 per cent of GDP on research and development.

Given that Canada’s close-to-100 universities rank a passable sixth among industrial nations in intellectual property development, you’d think Corporate Canada would be a world leader in commercializing discoveries. But we are not.

And while American business collaborates even with ideological adversaries in China on intellectual-property initiatives, Canadians are nowhere to be found in exploring and exploiting such knowledge breakthroughs.

“The level of caution could be viewed as excessive,” Carney said Wednesday of the risk-aversion among our captains of industry.

In Silicon Valley, Taipei, Mumbai and increasingly mainland China, serial entrepreneurs regard failure as a badge of honour. “Fail better” is among the business mottos in such places, along with “Only the paranoid survive,” a longtime recognition that complacency is the death not only of marriages but of benumbed firms like General Motors Corp. and Research in Motion Inc.

One does appreciate that the firms Carney has singled out as overly cash-rich, Suncor Energy Inc. and Teck Resource Ltd., have multibillion-dollar investment programs underway or on the drawing board. But most firms don’t have productive uses in mind for their spare millions. And Carney’s gentle nudge Wednesday was hardly a revelation to corporate treasurers and institutional investors.

Or to rank-and-file employees working with obsolete equipment and an employer’s lackadaisical approach to retraining.

Critics of Carney’s authority to tell business what to do — and no one would do it if he didn’t (see this column’s opening paragraph) — insist that economic malaise in the U.S. and Europe could wipe out any investments they might make there. Which hasn’t stopped our massive public-employee pension funds from plunging on infrastructure projects abroad. Or kept the Chinese from bargain-hunting in the Calgary oilpatch, the U.S. and across Africa.

Common sense dictates a coordinated approach among government, business and labour to incorporate a more comprehensive apprenticeship scheme into an upgraded education system, along the lines of Germany (whose jobless rate is lower than ours).

We also need Canadian businesses to partner with firms and governments in rapidly growing developing nations. And, as the OECD recommended, we can achieve greater competitiveness by breaking the antiquated but iron control of professional credentialing bodies over the supply of doctors, engineers and other professionals in critically short supply.

Until Monday, one of the clerks at my 7-Eleven was a native of Pakistan keeping his four children fed by ringing up lottery-ticket sales. A practising neurosurgeon in Karachi, he slipped into despondency and alcohol abuse during the interminable slog in meeting the requirements of a credentialing body whose real function is to keep its members’ income high by keeping membership low.

Productivity growth is achieved by, among other things, embracing the best and brightest talent from abroad. My friend died Monday in his adopted land of plenty, of liver failure, at 39. He leaves behind a country of diminished promise.

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